DraftKings spent a decade in the legal gray area of daily fantasy sports, blew through a billion dollars in marketing, survived the FanDuel arms race, and then the Supreme Court legalized sports betting and handed them the exact market they had been training for. They are now one of two dominant US sportsbooks and actually profitable. Timing matters in startups.
Founded
2012
HQ
Boston, MA
Total Raised
Public (NASDAQ: DKNG)
Founder
Jason Robins, Matt Kalish, Paul Liberman
Status
Public (NASDAQ: DKNG)
Verified Sep 2026
Website
draftkings.comTHE ORIGIN STORY
Jason Robins loved fantasy sports and hated waiting a whole season for results. In 2012 daily fantasy sports were a legal gray area — fast-paced, skill-based contests for cash that courts were generally treating as games of skill, not gambling.
DraftKings and FanDuel launched within months of each other and spent the next three years in the most expensive customer acquisition arms race in startup history, blowing through hundreds of millions in advertising. The 2018 Supreme Court ruling striking down the federal sports betting ban changed everything.
States started legalizing sports wagering, and DraftKings pivoted from being a daily fantasy platform to being a full sports betting operation virtually overnight.
WHAT THEY ACTUALLY DO
DraftKings operates a two-sided marketplace for sports gambling. On the consumer side: sports fans bet on games through its mobile app using traditional sportsbook wagering (point spreads, moneylines, totals) and daily fantasy sports contests where they draft a lineup and compete for cash prizes.
On the business side: DraftKings runs all the odds-setting, risk management, payment processing, and regulatory compliance. Revenue comes from the margin between what it pays winners and what it collects from losers, plus entry fees in daily fantasy contests.
THE PRODUCTS
DraftKings Sportsbook (legal US sports betting app), DraftKings Daily Fantasy Sports, DraftKings Casino (online casino in select states), DraftKings Predictions (prediction markets)
HOW THEY GREW
DraftKings targeted states as they legalized sports betting one by one, moving fast to be first-to-market in each new state. It partnered with league teams and media companies (ESPN, Yahoo) for distribution.
It acquired SB Tech (a gambling technology provider) through the SPAC deal, which gave it proprietary tech stack control. It also partnered with pro sports leagues for data and marketing access.
THE HARD PART
Customer acquisition in sports betting is insanely expensive. Every US state that legalizes sports betting requires a new license, a new marketing push, and years of operating at a loss before the market matures.
DraftKings spent close to $1 billion on sales and marketing in 2021 alone. The path to profitability requires a state-by-state slog through regulatory processes while writing enormous promotional checks to build market share.
It also has to keep its adjacent bets from becoming liabilities: DraftKings abruptly shut its Reignmakers NFT game and marketplace in August 2024 after a court refused to dismiss a class action alleging the tokens were unregistered securities.
MONEY TRAIL
Seed
2012 · Led by Angel investors
$1M raised
Series E
2017 · Led by Revolution Growth
$100M raised
SPAC Merger
2020 · Led by Diamond Eagle Acquisition Corp, plus SBTech acquisition (NASDAQ: DKNG)
$0 raised
WHO BACKED THEM
The Gaming Fund, Fox Sports, SB Tech, Diamond Eagle Acquisition Corp (SPAC)
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